Federal Benefits Service

Big Raises Remain Lackluster for Federal Manager’s Pay Cap

As Congress starts contemplating on what could be the largest pay raise for federal workers in 20 years in 2023, other individuals near the top of the General Schedule pay scale think the debate will have no impact on their paychecks. 

Back in March, President Biden proposed the largest pay increase since 2002 for federal employees, an average 4.6% increase. He did not get into specifics of exactly how the 4.6% figure would pan out between across the board increases to basic pay and average increases in locality pay, although typically 0.5% has been set aside for locality. 

However, around 60 members in the House are arguing that appropriators overrule the president’s plan and instead put in place a 5.1% pay raise next year. Rep. Gerry Connolly, D-Va. Introduced legislation in January wants to increase basic pay by 4.1%, and additionally provide an average 1% increase in locality pay. 

The response has been apathetic at best from a growing number of federal managers and other employees in technical fields, because the debate feels like a non-point: they’ll probably only receive the 4.1% boost to basic pay regardless of policy hopes. This is because the federal pay cap prevents them from receiving more than the across-the-board increase to basic pay. 

For General Schedule employees, the federal pay cap for basic and locality pay combined is set at the Executive Schedule Level IV pay rate, which in 2022 is $176,300. A report in February from the Congressional Research Service revealed the pay cap caused federal workers in 30 different locality pay areas to see less than the 2.7% pay raise implemented by Biden in January. 

The longstanding issue is no longer impacting those at the very top—GS-15 step 10s—either. There are 18 different locality areas where multiple steps within the GS-15 pay grade are all making $176,300 this year, and in the San Francisco Bay area, not only are GS-15 steps 4 through 10 all hitting the pay cap, so are employees at step 10 of the GS-14 grade. 

The Federal Managers Association has been working to alleviate this issue for years, so far unsuccessfully. A 2020 briefing document from the organization noted that GS-15 step 10s in Washington, D.C., were already making $15,000 less per year than they would have without the pay cap. 

“While federal employees in areas such as San Francisco, New York City, and Washington, D.C., have been impacted for many years, employees in North Carolina, Georgia, Oregon and elsewhere across the country are feeling the effects as well, and the problem grows every year,” the group wrote. “This issue can and will play a role in recruitment and retention to the federal workforce, which already has hiring issues. If an employee is offered a promotion at a higher level, with more responsibilities, but no corresponding salary increase, will they take on a new role? Technology employees who are now capped may be tempted to leave the government for the private sector, where there is no pay cap.” 

An FMA member and IRS manager, who declined to be named because he was not authorized by his agency to speak to a reporter, recently said that he has been at the pay cap for several years, and he now thinks of locality pay as a “flat tire that’s pretty much falling off the wheel.” 

“We’re seeing it in high-cost cities like San Francisco and New York—the GS-15 is just not as attractive as it once was, because it’s pretty much the same pay as a GS-14, but with more responsibilities,” the member said. “Grade 15s are senior managers or people in highly technical positions, and these people now have to decide whether they want more responsibilities with no pay incentive.” 

The IRS manager acknowledged that Congress can’t just remove the pay cap without granting some feds five-figure raises, but suggested finding some way to at least give those feds the same locality pay bumps as everyone else. 

“So if President Biden has a 5% raise and that’s with locality pay factored in, so maybe on average [the locality pay] is 1% of that,” he said. “So 4% is what everyone gets, and the people who are capped will only get the 4%, and every year it only gets worse and worse. So at least give them the 1% so you’re not widening that gap further, because eventually it’s going to be too late.” 

Yet it remains unclear whether there is true desire in Congress to adjust how the pay cap works, which is set in statute, besides from annual one-time increases to account for basic pay raises. Connolly, sponsor of the bill to provide what is likely an additional 0.5% increase in locality pay, declined any further comment on the issue. 

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